"The increase reflected strong margin growth in its wholesale markets, which more than offset a small decline in customer [retail] markets margin and
planned increases in operating expenditure," the company said in a statement to the ASX.

AGL chief executive Andrew Vesey said he was well aware of the impact high energy prices were having on customers.

"We are committed to delivering further solutions to customers in coming months and in doing all this at the lowest possible cost", Mr Vesey said.

Prices may have peaked

Mr Vesey said wholesale prices may have peaked for the time being.

"Lower spot prices and lower volatility mean the moderation should continue," he told an investor briefing.

While the wholesale markets supported the result, times were far tougher in the retail market as competition heated up and political pressure bore
down on the company.

Mr Vesey said the downward pressure on retail margins was not just an event stimulated by pressure from state and federal governments, but a permanent
change in the fabric of the market.

"The whole market is entering and increased shopping around and competition."

Shareholders were big winners with a 32 per cent increase in the interim dividend to 54 cents per share, largely thanks to better cash flow and a stronger
balance sheet and $310 million cut in net debt.

However that was not enough to head off concerns about rising costs and AGL shares were sold down by 1.7 per cent to $22.04 in morning trade.